Sureties and banks, as well as rating agencies and governmental customers, analyze a contractor’s financial strength using different metrics and methods. Liquidity (the ability to meet obligations as they arise) is generally prized as the greatest strength, with leverage and profitability close behind. For bonding purposes, the contractor must understand the surety’s unique approach to liquidity analysis, with the goal being to steer the bonding company—rather than being steered by it.
The recent Maryland Court of Special Appeals opinion in the case of Schneider Electric v. Western Surety Company underscores the sometimes problematic interaction of incorporation by reference clauses in surety bonds.
Building a solid foundation for a good relationship with sureties is important to every contractor. Just as with any relationship, it must be built on trust, mutual respect and honest communication. Sureties want to work with contractors that are accountable and proactive. They also expect contractors to have good management skills so that a profit is realized on the majority of their projects.
In 2016, the surety and construction industries continued to work together in the state legislatures and Congress to address issues of mutual interest. Here’s a look back at some important legislation in 2016.
Public-private partnerships (P3s) are gaining momentum throughout the United States as an efficient way to design, build, finance and maintain government construction projects. Under a P3, the government entity generally issues an RFP to engage a concessionaire for the project. The concessionaire then secures funding for the project while holding the right to use the project property for the duration of the construction, operations and maintenance period outlined in the agreement.
The famous actor and author Will Rogers once said, “You never have a second chance to make a good first impression.” This statement has more to do with year-end financial statements than contractors may think.
The conventional wisdom among construction executives is that surety bonds are a necessary evil. But surety bonds can be a blessing in disguise when a company fails on a construction project.
When a contractor defaults on a building project, there are no winners. The company owner lost his livelihood, reputation and future ability to be trusted. The client suddenly finds its investment in dire risk and dozens of subcontracting firms, suppliers and workers are abruptly out of work.
Each year, the Merchants Bonding Company™Leaderboard Program salutes agency partners who have demonstrated surety savvy and collaboration for growth. We salute Wells Fargo Insurance Services USA Inc. of Phoenix, Ariz., for achieving the Drivers Tour of surety professionals. We thank them for the successes we’ve had together and recognize them for sharing our common-sense vision. See our online salute to Wells Fargo Insurance Services USA here. Continue »
Each year, the Merchants Bonding Company™Leaderboard Program salutes agency partners who have demonstrated surety savvy and collaboration for growth. We salute Aon Risk Services Central Inc. of Green Bay, WI, for attaining the Champions Tour of surety professionals. Congratulations to Kent Arps, Jeff Meisinger & Brian Krause for surety professionalism in 2013. Merchants has partnered with Aon Risk Services Central Inc. for 23 years. We thank them for the successes we’ve had together and recognize them for sharing our common sense vision. See our online salute to Aon Risk Services Central Inc. of Green Bay, WI, here. Continue »
When looking to grow a business, it’s important to consider the advantages and disadvantages of the firm’s existing legal structure. Continue »